SAP in $2.4bn cloud acquisition

SAP has agreed to buy Callidus Software for about US$2.4bn to bolster a cloud-based business that grew strongly in the fourth quarter.

SAP said it generated sales of €6.8bn in the period, in line with analysts’ expectations, on accelerating uptake of flagship business software S/4 Hana. New cloud bookings, a keenly watched metric because it is to provide future sales growth, grew 31% at constant currencies, the Walldorf, Germany-based company said on Tuesday.

CEO Bill McDermott has been expanding cloud-based services to challenge rivals such as Salesforce.com and Oracle and serve clients using the software to run sales, manufacturing and human resources functions. SAP agreed to pay $36/share for Dublin, California-based Callidus, known as CallidusCloud, to give Europe’s biggest software company access to new sales analytics and customer engagement tools.

We did it because it’s the most innovative company in its space. We want CRM, we’re going for it

“We did it because it’s the most innovative company in its space,” McDermott said on a call with reporters. “We want CRM, we’re going for it.”

S/4 Hana added a thousand customers including Unilever and Puma in the fourth quarter to reach more than 7 900 users, a greater intake than in the previous three-month period. The software allows businesses to run tasks on their own machines or in a cloud-computing arrangement hosted by SAP or one of its partners.

Operating profit, excluding share-based compensation, amortisation and other charges, was €2.36bn, slightly missing the average estimate of €2.4bn. The company sees non-IFRS operating profit in a range of €7.3bn to €7.5bn this year.

SAP said the deal will be “essentially neutral” to non-IFRS earnings per share for fiscal 2018 and accretive to EPS in fiscal 2019. The offer is a 21% premium to the 30-day volume-weighted average price of the target. SAP will fund the acquisition by existing cash reserves and an acquisition loan and is expected to close in the second quarter of 2018, subject to approval from regulators and investors, SAP said in the statement. — Reported by Stefan Nicola, (c) 2018 Bloomberg LP